Mortgage calculations: inputs before answers

Separate payment components

Principal and interest are only part of a housing payment. Property tax, homeowner insurance, mortgage insurance, association charges, and escrow changes can materially change cash flow. Record each input, its source date, and whether it is monthly or annual.

Interest calculations also depend on compounding and payment timing. A simple worksheet is an estimate, not a lender disclosure or approval.

• Purchase price and down payment
• Loan principal
• Interest rate and term
• Taxes, insurance, and recurring charges

Use ranges for uncertain inputs

Run a base case and a higher-cost case for taxes, insurance, maintenance, and rate changes. A precise answer from uncertain inputs creates false confidence.

Compare the worksheet with the Loan Estimate when one is available. Resolve differences in loan amount, rate, points, credits, closing costs, and escrow instead of changing the worksheet until it matches.